New Mexico commercial real estate officials, assessors eye working group after tax cap fails to advance

Many pieces of legislation crossed the finish line during this year’s legislative session, from medical malpractice reform to tax breaks for affordable housing projects.

Yet, despite strong backing from NAIOP New Mexico and much of the commercial real estate community, legislation that would have capped nonresidential, or commercial, property tax evaluation increases at 5% per year never made it out of the gate.

In a February YouTube video, NAIOP Executive Director Rhiannon Samuel and Government Affairs Chair Sal Perdomo said the cap stalled after much “back and forth” between NAIOP, the New Mexico Counties Assessors’ Affiliate and the New Mexico Association of Counties, a nonpartisan organization representing New Mexico’s 33 counties and their public employees and elected officials.

The entities could not reach consensus on the cap number and decided instead to form a working group to hash out details and concerns over the next several months and build a stronger foundation for the 2027 legislative session, Samuel said.

“Although this was not the outcome we were hoping for this session, we feel … that this is the best course forward,” she said.

The proposed legislation — a Senate resolution and House bill that were filed but never saw vote action — would have limited how much assessments of commercial properties in New Mexico could increase per year. An assessment, determined by each county’s assessor, outlines how much a property is worth and how much a property owner owes in taxes on that property.

The cap that NAIOP sought this legislative session was lower than the 12% cap proposed through legislation last year, which also stalled. Samuel said the organization felt the 5% ask was data-backed and mathematically justifiable, given the high assessments property owners have seen over the past few years.

From 2024 to last year, NAIOP’s commercial property owners — primarily based in Bernalillo County — saw an average valuation increase of 62%, according to Samuel. Some saw increases as high as 704%.

The higher valuations are in part the result of the Bernalillo County Assessor’s Office, under the leadership of Assessor Damian Lara, making a concerted effort to bring property valuations to their current and accurate values after years of past assessors undervaluing properties.

After three years of higher assessments, NAIOP felt that the office’s efforts to bring properties to current and correct values made enough progress to make the 5% cap defensible, Samuel said. But the assessor’s affiliate couldn’t get on board.

“Myself included and other county assessors did not rule out coming down a little bit from that 12%, but not anywhere near what was being proposed by NAIOP this year,” said Lara, vice chair of the New Mexico Counties Assessors’ Affiliate. “We were just too far.”

Lara said conversations exploring an 11% or 10% cap might have a better chance next year, adding that he and the New Mexico Counties Assessors’ Affiliate are willing to work with the commercial real estate industry’s stakeholders to reach a deal.

Samuel and Perdomo echoed Lara’s sentiment on working together, adding they are focused on getting the working group — set to include members of the New Mexico Counties Assessors’ Affiliate, the New Mexico Association of Counties, NAIOP and the state’s business communities — up and running over the next month or so.

“It’s a statewide effort, so that’s why there’s some speed and expediency behind it,” Samuel said.

Even if a commercial property tax cap bill passes in next year’s session, the cap would still have to be approved by voters through a statewide ballot because it would amend a tax law codified in the state constitution. A statewide ballot will be offered later this year, coinciding with the general election, and it will not be offered again until 2028.

Still, the trade organization is focused on building a strong case for getting the legislation past the finish line in 2027 — knowing it may still take multiple sessions to get everyone on board.

Samuel said NAIOP’s members are “certainly disappointed” that the cap didn’t advance this year, adding it would have provided property owners with some financial predictability. But the executive director is optimistic about working with members, legislators and assessors to find common ground.

“If we want businesses (to grow), if we want New Mexicans defended from market fluctuations and inflation, we need a cap,” Samuel said. “We need to know what we’re working with.”

Kylie Garcia covers retail and real estate for the Journal. You can reach her at kgarcia@abqjournal.com.